There’s been a higher than expected increase to the latest rate.
Inflation is at it’s highest rate since the start of 2024. Here, we explain everything you need to know about the latest inflation stats and which savings accounts offer inflation-beating rates.
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What is the current rate of inflation in the UK?
The current CPI rate of inflation in the UK is 3.5% for April 2025, according to the latest figures from the Office for National Statistics (ONS). It was expected to jump from 2.6% to 3.3%.
The current rate of core inflation (which removes more volatile products like food and fuel) in the UK is 3.8%, up from 3.4% last month. Services inflation (which has remained higher than the rest for a while now) risen to 5.4% from 4.7%.
Meanwhile, RPI (still used in some cases such as rail fares, interest on student loans and air passenger duty) in the UK is up to 4.5%. It was 3.2% last month.
Historic inflation rates
The graph below shows how CPI inflation has changed in the UK.
source: tradingeconomics.com
What is inflation?
The main thing to remember is even if the rate of inflation is falling, prices are still going up. They’re just increasing by a slower rate.
Check out our What are inflation and deflation? article to learn more about what price changes count towards inflation, as well as explanations of the different measures including CPI and RPI.
When is the next inflation announcement?
The next inflation announcement will be on 18 June 2025.
The ONS publishes inflation figures each month and has confirmed the following dates for upcoming announcements :
- 18 June 2025
- 16 July 2025
- 20 August 2025
- 17 September 2025
- 22 October 2025
- 19 November 2025
- 17 December 2025
What’s changed this month?
The huge hikes to energy and water bills in April are big contributors to the higher inflation rate this month. Air fares have also jumped up a lot. Food prices also went up.
There were falls in the cost of clothing and furniture, though not enough to offset the increases elsewhere.
You can see how prices have changed for individual items in this ONS calculator, while this chart shows the annual CPI rates over 12 months for the last three months.
| Mar 2025 | Apr 2025 | |
|---|---|---|
| CPI All items | 2.6 | 3.5 |
| Food and non-alcoholic beverages | 3.0 | 3.4 |
| Alcohol and tobacco | 5.3 | 5.7 |
| Clothing and footwear | 1.1 | -0.4 |
| Housing and household services | 1.8 | 7.8 |
| Furniture and household goods | 0.5 | -0.5 |
| Health | 5.0 | 4.3 |
| Transport | 1.2 | 3.3 |
| Communication | 6.0 | 5.8 |
| Recreation and culture | 2.4 | 3.1 |
| Education | 7.5 | 7.5 |
| Restaurants and hotels | 3.0 | 2.7 |
| Miscellaneous goods and services | 3.1 | 2.5 |
| All goods | 0.6 | 1.7 |
| All services | 4.7 | 5.4 |
| CPI exc food, energy, alcohol and tobacco (core CPI) | 3.4 | 3.8 |
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Will inflation go up or down?
An increase to around this level was expected thanks to “awful April”, and it could well keep going up. Earlier this month the Bank of England predicted a 3.7% rate in September.
After this though the bank thinks it will begin falling back down, reaching the 2% target by the end of next year.
What does it mean for the base rate of interest?
This month, the Bank of England cut the base rate to 4.25%. There’s an expectation we’ll see more cuts in 2025, though with inflation higher than forecast this month, markets are saying the next cut probably won’t be in June or August. Instead we could see a reduction in September to 4% – though these predictions frequently change.
What does it mean for future price increases
October’s inflation rates aren’t linked to any key increases. Here are the main price hikes linked to inflation rates:
- July RPI – rail fares in March
- September CPI – benefits including State Pension in April
- December CPI – student loans in September
Do any savings accounts beat inflation?
Despite falling savings rates, we’re still at a place where there are lots of options that beat inflation!
The top-paying savings account is the Principality Building Society Regular Saver which offers 7.5%, though only for six months. It’s worth noting that this is a regular savings account.
You can also earn 6% with the Santander Edge Saver, if you hold a Santander Edge account. If you add direct debits (to earn cashback) on the linked current account there’s a monthly fee for the current account, so keep that in mind when comparing savings rates.
However if you’re looking for accounts without these balance restriction, there are now dozens of easy access and fixed rate savings accounts above the inflation rate.
Hi Andy, great summary, very professional. I’m still learning about all of these subjects, so thanks for that!
Do you know what to expect regarding the interest rate of the savings accounts? Are the banks planning to reduce the interest rate soon based on the reduction in the UK inflation?
Government controlled ONS will produce low incorrect data for September in order to determine next years pension & benefit increases then “amend” the data by December so the government can claim that it is too late to correct next years increases.